One of the biggest and best business bank accounts in the UK has recently been fined heavily by the Financial Services Authority.
The FSA has recently ordered financial service provider Barclays to repay approximately £60 million to its customers for mis-sold investments. Additionally the regulatory organisation has also levied a £7.7 million fine against the High Street bank, bringing the total figure to close to £70 million in fees.
After an investigation of two funds sold by the bank – Aviva’s Global Cautious Income Fund and the Global Balanced Income Fund – the FSA discovered what it called ‘serious failings’ in how Barclays had sold both investments. With a total value of almost £700 million, both investment opportunities were made available to customers between July of 2006 and November of 2008.
The investment funds were mis-sold because Barclays neglected to take into account several factors when selling them to its customers, according to the FSA. The regulatory body remarked that little to no consideration was paid to the investment objectives, experience, knowledge, or financial circumstances to the more than twelve thousand customers to which Barclays allowed to buy shares in the two funds.
One FSA official remarked that it is a requirement of firms to have procedures in place that will ensure suitable investment advice is given to customers. The spokesperson stated that firms need to take account of their customers’ financial circumstances, risk attitudes, and investment goals before making any recommendations. However Barclays neglected to do this, and as a result thousands of investors have suffered after relying on the banking giant’s advice, the official added.
The FSA also stated that Barclays chose to not take effective action once the failings came to light. As a result the regulator has taken the breaches of customer trust as quite serious and feel completely justified in charging such a substantial fine to the company.